Supporting Black and Latina women entrepreneurs is an important measure to take in order to create a more inclusive entrepreneurial community. digitalundivided’s ProjectDiane2018 report found that Black and Latina women who are supported for their entrepreneurial commitments impact their respective communities substantially: by deepening their networks and ecosystems. However, data from this project shows that Black and Latina women face disproportionate challenges in receiving funding to scale their companies and only make up a small proportion of total invested companies. To combat the challenges that these women of color entrepreneurs face, there are steps that can be taken in order to minimize these disparities.
In 2017, 6,791 funded startups were founded by at least one woman but less than 4 percent of these startups were founded by a Black and/or Latina woman. 34 Black women founders raised more than USD 1 million in venture funding, twice the number of founders in 2016. However, the vast majority of Black women founders raised less than USD 1 million with an average of just USD 42,000 in the first seed round in comparison to the average startup seed round funding of USD 1.4 million. Additionally, since 2009, Black women have raised only .0006 percent (USD 289 million) of the USD 424.7 billion raised in total tech venture funding.
The number of startups founded by Black women have doubled in 2017 from 2016. Over 95 percent of Black women founders have a bachelor’s degree and 50 percent of these women have a master’s or PhD. Yet, data suggests that Black and Latina women are simply not receiving venture capital funding. How can we better support these entrepreneurs?
digitalundivided’s ProjectDiane2018 research suggests that investors, funders, ecosystem builders and policy makers should start with 3 important steps.
Create More Pipelines
ProjectDiane2018 reports that more programs and individuals need to support, empower, nurture and help grow Black and Latina women entrepreneurs within the diverse ecosystems that they are a part of. This includes but is not limited to active participation, personal engagement, relevant mentorship, and financial support. Pathways with active support from those who have experience can better support these women of color entrepreneurs in receiving funding and scaling their businesses.
Lure Black and Latina Entrepreneurs from Big and Expensive Cities
Nearly 50 percent of Black and Latina women entrepreneurs are based in New York City, San Francisco or Los Angeles. These cities are three of the most expensive places to live in the U.S. and can place extra risk on these entrepreneurs during the early stages of creating a company. Cities like Newark, Philadelphia, Sacramento and San Diego have the opportunity to create incentives that make Black and Latina women entrepreneurs feel more financially secure when building a business while still maintaining connection to major entrepreneurial hubs, research institutions, lower costs of living and diverse populations.
Focus on the Person, Not the Degree
digitalundivided ProjectDiane2018 recognizes the importance of having a STEM education within diverse communities but wants to emphasis the importance in developing other skillsets such as resilience, coachability and the ability to pivot because of its correlation in creating successful diverse founders. Black and Latina women should be able to confidently communicate themselves, their businesses, channel their inner power and learn how to rely on a loyal network. Recognizing this as just as, if not more than important than having an academic degree is key to being able to better support Black and Latina women entrepreneurs.
digitalundivided’s ongoing, proprietary research initiative, ProjectDiane, is a biennial demographic study on the state of Black women founders.
Citation: digitalundivided’s ProjectDiane 2018
To see the official summary of the report, click here.
Contributed by Penmai Chongtoua